Cost-Effective Service Excellence

Purpose This study aims to show how major service developments in China, India and Singapore offer different perspectives on how cost-effective service excellence (CESE) can be achieved in health care. Resulting research opportunities are highlighted. Design/methodology/approach The study is based on the authors’ in-depth experience in these three countries. Findings Digital platforms and related technologies seem more advanced in China than in most western economies in terms of their application, user acceptance and market penetration. The resulting digital ecosystem enabled innovation that provides CESE in digital health care. Second, India benefitted from a large health care market without excessive regulation, litigation risks and interlocking stakeholders. These allowed a number of organizations to achieve CESE through new business models and frugal innovation. Likewise, Singapore is a global leader in health outcomes while it also has one of the lowest health care cost per capita. This is achieved through focus on costs and productivity, standardization and digitization while being intensely focused on health outcomes and the patient experience. Research limitations/implications The three countries stand out in the ways they achieved CESE in health care and offer interesting research opportunities. China has fully integrated digital platforms with rapid innovation capabilities, India has extremely high volumes that met focused service factory and frugal service innovation approaches, and Singapore is a tightly controlled health care market with high levels of discipline, both facilitated by its culture and small size. These markets invite research to explore their successes in more depth and deduct lessons for CESE in health care elsewhere. Originality/value Together, the author team has decades of managerial, executive teaching and research experience related to service in Asia. The observations and reflections in this study originate from this unique perspective.

sg; Robert Johnston is Professor with the Warwick Business School, University of Warwick, Coventry CV4 7AL, UK. We are most grateful to the various members of Singapore Airlines' senior management, who generously provided their time, ideas and secrets to success in a number of in-depth interviews. The case was commissioned by the Institute of Customer Service in the UK as part of a study into Service Excellence. The authors gratefully acknowledge the sponsorship provided by Britannic Assurance, FirstGroup, Lloyds TSB, RAC Motoring Services, and Vodafone. We also like to acknowledge Karen Liaw, Public Affairs, Singapore Airlines for arranging our interviews with SIA's management, and Jasmine M.C. Ow for providing excellent research assistance throughout this project. ABSTRACT Singapore Airlines (SIA) is internationally recognised as one of the world's leading carriers.

How has Singapore Airlines consistently managed to stay one step ahead of the competition in the airline industry and, along the way, remain consistently profitable? Loizos Heracleous, Jochen Wirtz and Robert Johnston suggest that the martial art of kung fu offers one means of understanding the airline’s outstanding performance. The highest state of attainment in the martial art of kung fu is the ability to seamlessly combine the hard and the soft. Speed and flexibility derive from being soft and fluid while penetrating attacks derive from applying hard energy at the right time to specific, targeted points. This winning combination of soft and hard does not come naturally; it needs to be ceaselessly practiced. In competitive, threatening situations, people -- and organisations -- unwittingly tend to tense and seize up. In so doing, they reduce their adaptive ability and diminish their chances of responding effectively. The only way to enter the realm of the kung fu master is to drill this soft/hard orientation into one’s sub-conscious through continuous practice, so that it becomes second nature. This martial arts metaphor sheds light on how Singapore Airlines (SIA) has become the recognised master of innovation in the airline industry and has consistently outperformed the industry for decades. SIA has never incurred a loss on an annual basis and has shown healthy returns since its founding in 1972. In contrast, the airline industry as a whole has suffered from a cyclical pattern of bubble, crash, stabilisation and recovery, with nearly half the years in the last two and a half decades marked by heavy losses.

This is the first book on Intelligent Automation (IA). Also called Hyperautomation, it is one of the most recent trends in the broad field of artificial intelligence. IA is a cutting-edge combination of methods and technologies, involving people, organizations, machine learning, low-code platforms, robotic process automation (RPA), and more. ------- Key content of the book: What is Intelligent Automation (IA)? Why has the use of IA been expanding so rapidly? What are the benefits it unleashes for employees, companies, customers, and society? How have leading organizations been able to harness the full potential of IA, at scale, and generate massive efficiency gains in the range of 20 to 60%? ------- What you will get from this book: Get the lessons learned from 100+ IA transformation successes (and failures). Benefit from the largest publicly available library of 500+ IA use cases by industry and by business function. Gain access to insights garnered from 200+ IA industry experts. ------- Read more about this first book on Intelligent Automation: www.intelligentautomationbook.com.

Cost-effective service excellence (CESE) is defined as achieving low unit costs (i.e., high productivity) while at the same time delivering an industry-leading level of service quality (i.e., service excellence). This chapter is based on and extends the article by Wirtz and Zeithaml (2018), and discusses how CESE can be achieved through three strategic pathways. The first is a dual culture strategy that provides a comprehensive set of high-quality services at low cost, largely driven by leadership ambidexterity and contextual ambidexterity. The second is an operations management approach that reduces process variability and thereby allows increased use of systems, technology, robotics, and artificial intelligence (AI). The third is a focused service factory strategy that enables CESE through a highly specialized service operation, typically delivering a single type of service to a highly focused customer segment. These three strategies can be used independently or in certain combinations. This chapter discusses the theoretical underpinnings and workings of these strategic pathways and advances potential future research directions.

Service excellence and cost-effectiveness are perceived to be in conflict, yet there are organizations that achieve both. Organizations that successfully pursue a dual strategy have been shown to outperform their peers. Competitive pressures will make it critical to take the management of such contradictions and paradoxes seriously. This article shows that the successful management of service excellence and cost-effectiveness does not have to be a conflict in objectives as a dual focus can be achieved by firms that master ambidexterity.

Purpose The purpose of this paper is to examine peer-to-peer sharing platform business models, their sources of competitive advantage, and the roles, motivations and behaviors of key actors in their ecosystems. Design/methodology/approach This paper uses a conceptual approach that is rooted in the service, tourism and hospitality, and strategy literature. Findings First, this paper defines key types of platform business models in the sharing economy anddescribes their characteristics. In particular, the authors propose the differentiation between sharing platforms of capacity-constrained vs capacity-unconstrained assets and advance five core properties of the former. Second, the authors contrast platform business models with their pipeline business model counterparts to understand the fundamental differences between them. One important conclusion is that platforms cater to vastly more heterogeneous assets and consumer needs and, therefore, require liquidity and analytics for high-quality matching. Third, the authors examine the competitive position of platforms and conclude that their widely taken “winner takes it all” assumption is not valid. Primary network effects are less important once a critical level of liquidity has been reached and may even turn negative if increased listings raise friction in the form of search costs. Once a critical level of liquidity has been reached, a platform’s competitive position depends on stakeholder trust and service provider and user loyalty. Fourth, the authors integrate and synthesize the literature on key platform stakeholders of platform businesses (i.e. users, service providers, and regulators) and their roles and motivations. Finally, directions for further research are advanced. Practical implications This paper helps platform owners, service providers and users understand better the implications of sharing platform business models and how to position themselves in such ecosystems. Originality/value This paper integrates the extant literature on sharing platforms, takes a novel approach in delineating their key properties and dimensions, and provides insights into the evolving and dynamic forms of sharing platforms including converging business models.

https://rdcu.be/bEd69 Berry (2019) highlights the urgent need for innovation in healthcare as cost pressure is intense and service quality, both in terms of objective care and treatment quality, is critical for the wellbeing of our societies. Yet, administrative and operational waste is prevalent and service quality leaves much to be desired in many healthcare institutions. This commentary draws on the article by Wirtz and Zeithaml (2018) and discusses how three strategic pathways towards cost-effective service excellence (CESE) can be applied to healthcare. CESE is defined as achieving low unit costs (i.e., high productivity) while at the same time delivering service quality (i.e., service excellence) at an industry-leading level. The three pathways are the dual culture strategy, the operations management approach, and the focused service factory strategy. Implications for innovation in healthcare are discussed. https://rdcu.be/bEd69

>>> Purpose – The service sector is at an inflection point with regard to productivity gains and service industrialization similar to the industrial revolution in manufacturing that started in the 18th century. Robotics in combination with rapidly improving technologies like artificial intelligence (AI), mobile, cloud, big data and biometrics will bring opportunities for a wide range of innovations that have the potential to dramatically change service industries. This conceptual paper explores the potential role service robots will play in the future and advances a research agenda for service researchers. >>> Design/methodology/approach – This paper uses a conceptual approach that is rooted in the service, robotics, and AI literature. >>> Findings – The contribution of this article is threefold. First, it provides a definition of service robots, describes their key attributes, contrasts their features and capabilities with those of frontline employees, and provides an understanding for which types of service tasks robots will dominate and where humans will dominate. Second, this article examines consumer perceptions, beliefs and behaviors as related to service robots, and advances the service robot acceptance model (sRAM). Third, it provides an overview of the ethical questions surrounding robot-delivered services at the individual, market and societal level. >>> Practical implications – This article helps service organizations and their management, service robot innovators, programmers and developers, and policymakers better understand the implications of a ubiquitous deployment of service robots. >>> Originality/value – This is the first conceptual article that systematically examines key dimensions of robot-delivered frontline service and explores how these will differ in the future.

The National Library Board (NLB) Singapore is a statutory board that managed to become a serial innovator. Its globally leading innovations in the library context include an award-winning radio frequency identification (RFID) system to automate check-out, returns, and sorting of books, shelf-reading robots, and even self-service libraries. NLB's consistent focus on excellent service delivery reinforced its commitment to innovation. Key levers were effective strategic leadership, a smart innovation strategy that made heavy use of technology-such as app-delivered self-service technologies and crowdsourcing-as well as a people-centric staff culture. NLB managed to co-create attractive libraries of the future together with different types of community members, such as volunteers and corporations, ushering in a new age of citizen involvement, while also preparing both the library and the population of Singapore for the knowledge demands of the 21st century. This case study examines NLB's drivers of successful innovation.

This article integrates relevant literature to develop a conceptual model on the potential avenues to achieve service excellence at low unit costs, which we term cost-effective service excellence (CESE). To gain a deeper understanding of these strategies, their applicability and interrelatedness, we analyze how 10 organizations have achieved CESE. Our findings show that CESE can be achieved through three core strategies. First, a dual culture strategy provides a comprehensive set of high-quality services at low cost, largely driven by leadership ambidexterity and contextual ambidexterity. Second, an operations management approach reduces process variability and thereby allows the increased use of systems and technology to achieve CESE. Third, a focused service factory strategy can enable CESE through a highly specialized operation, typically delivering a single type of service to a highly focused customer segment. The use of the three approaches ranges from “pure” (e.g., mostly pursuing a dual culture strategy) to combinations of the latter two approaches with the dual culture strategy (e.g., a focused service factory strategy combined with dual culture). Our conceptual model provides an integrated view of the strategic options available to organizations that aim to pursue a strategy of CESE.

This book aims to answer a simple but intriguing question: How has Singapore Airlines (SIA) managed to make healthy profits year in year out, in an industry whose financial performance over the years has been dismal? SIA’s profitability on the other hand has been exceptional, superior in the long term to any competitor in its peer group. Our purpose in writing this book is to answer this question, based on our in-depth research on the airline industry and SIA, and derive some general lessons for managers in other industries. We begin the book with an analysis of the airline industry and its key trends (Chapters 1 and 2), moving on to a broad outline of SIA’s strategic drivers of success (Chapter 3). We then focus on specific elements of SIA’s strategy and organisation, such as its core competency of cost-effective service excellence (Chapter 4), its innovation capabilities (Chapter 5), and its human resource management practices (Chapter 6). We end with some strategic lessons that we believe apply to any organisation that aims to achieve sustainable success in hyper-competitive markets (Chapters 7 and 8). Chapter 1 analyses the airline industry as a whole, reviewing its historical development, important trends over time and key aspects of the industry economics. Issues discussed include the impact of government intervention; uncontrollable factors such as oil prices or political events; factors such as the perishability of seats, seasonality of demand and long time horizons in infrastructural decisions, injecting additional levels of complexity; airlines’ fixed and variable direct operating costs, and indirect operating costs; and lastly the chronically poor and volatile performance of the whole industry. Key trends in the industry such as the formation of alliances, the emergence of budget carriers and regional growth are addressed. Chapter 2 outlines macro-environmental trends affecting the airline industry such as political, economic, social and technological elements, and then engages with the industry’s underlying structural dynamics such as the rivalry among competitors, threat of new entrants, power of suppliers and buyers and threat of substitutes. Lastly, strategic imperatives for airlines to succeed in this difficult environment are discussed, such as the need to utilise cutting-edge technology, the importance of cost-control, alliance management, avoiding the herd instinct and strategies to address commoditisation. Chapter 3 proceeds to focus on SIA itself, addressing important strategic choices and resource deployment decisions at SIA, in order to get a broad understanding of the company’s superior performance. Factors discussed include SIA’s young fleet, low staff costs, global revenue base, push for efficiency, brand reputation, strategic consistency, response to crises, and alliance and acquisition strategies. In addition to having a significant stand-alone impact on SIA’s performance, these factors also interact with other factors, thus enhancing the magnitude of their impact. A key conclusion drawn from this analysis is that SIA’s superior performance is attributable to a complex array of strategic decisions which have been highly consistent over time. As we further discuss in Chapter 4, imitators would have to copy many of SIA’s strategic and organisational aspects to achieve similar levels of performance; this is always a more difficult task than copying single aspects. Chapter 4 addresses what we believe is SIA’s core competence, cost-effective service excellence. It is relatively easy to deliver excellent service if one pours money into doing so. It is also relatively easy to achieve low costs if one does not aim to deliver excellent service. What is much harder to do is to deliver service excellence in an efficient manner, in other words implementing a strategy that integrates elements of differentiation and cost leadership. SIA is known for its service excellence, but what is less often appreciated is that its costs (seen as cents per available seat kilometre) are among the lowest in its peer group. How has SIA managed to achieve this? In common with other organisations with a reputation for excellent service, SIA displays characteristics such as top management commitment, customer-focused staff and systems, and a customer-oriented culture. However, our research has uncovered further insights into the development and maintenance of a reputation for service excellence while controlling cost – what we call the ‘five pillars’ of SIA’s activity system. These pillars are rigorous service design and development; total innovation (integrating continuous incremental improvements with discontinuous innovations); profit and cost consciousness ingrained in all employees; holistic staff development; and reaping of strategic synergies through related diversification and world-class infrastructure. These five pillars of SIA’s cost-effective service excellence are supported, operationalised and made real in everyday decisions and actions through a self-reinforcing activity system of virtuous circles, presented in the chapter. The core competence of cost-effective service excellence and the cultural values supporting it are thus more than just abstract ideas. They are ingrained into both the hearts and minds of employees as well as organisational processes. This may help to explain why SIA’s competitive advantage has been sustained for decades. While it is easy to copy single elements, it is much harder to reproduce an entire self-reinforcing activity system. Chapter 5 continues the theme of service excellence with a focus on innovation. This chapter sheds light on SIA’s ability to be a serial innovator, introducing many firsts in the airline industry, and sustaining this innovative orientation over decades in the face of intense cost pressures, industry crises and the push towards commoditisation. We first present senior management’s perspective of the key challenges they face in delivering sustained and cost-effective service excellence. These challenges include, firstly, how to consistently satisfy the sky-high and rising expectations of SIA’s demanding customer base; secondly, how to balance standardisation and customisation of its services, and deal effectively with the tension between offering uniform service that is at the same time personalised; and thirdly, how to approach a large number of services and their support sub-processes in a holistic manner to attain consistent excellence in all related processes and sub-processes. The chapter proceeds to address SIA’s innovation process, characterised by the ability to seamlessly combine the hard and soft aspects of innovation. SIA’s unique approach to new service development involves the seamless combination of both hard, structured, rigorous, centralised innovation, led mainly by the Product Innovation Department, with the soft, emergent, distributed, but equally significant innovation led by different functional departments. This competence is further enhanced by SIA’s integrated customer and frontline staff feedback systems that provide valuable insights for both the Product Innovation Department and other functional departments. Chapter 6 then addresses SIA’a human resource management processes, a crucial aspect of any service business where people, especially frontline staff, are a core part of the offering and the most visible element of the service. Frontline staff from a customer’s point of view can be seen as an integral element of the service firm itself, delivering the service and ideally acting as a conduit for understanding the customer’s needs and wants; an understanding that can then be used as an important input in the innovation process. Frontline staff are also a core part of the brand, determining whether the brand promise gets delivered. After addressing these issues with examples from SIA, the chapter turns to a discussion of the five elements forming SIA’s human resource management, and how each of these elements reinforces SIA’s service excellence strategy. The five elements are stringent selection and hiring of people, followed by extensive training and re-training, formation of successful service delivery teams, empowerment of the frontline staff, and motivation. Even though these service elements are simple to state, very few firms have been able to implement systems that deliver these to a high level. In this chapter, drawing from further insights from SIA’s strategic human resource management practices, we also outline how SIA manages to address the three key service-related challenges introduced in the earlier chapter; namely how to deal with sky-high customer expectations, how to achieve balance between service standardisation as well as personalisation, and how to approach a large number of services and support sub-processes in totality to attain service excellence. The reason we undertook this study was to gain a deeper understanding of the factors that can help a company achieve sustainable success in extremely tough industries, so we based our study on the analysis of the strategy and organisational features of a company that has achieved just that. Chapters 7 and 8 present some lessons from our research in SIA, which we believe apply to any company in search of sustainable competitive advantage, the holy grail of strategy. We do not aim to provide silver bullets (which are not possible in such situations anyway given the context specificity of business challenges and solutions) but rather to suggest useful strategic principles, and to help executives ask the right questions. Chapter 7 begins by reminding us why it is so hard to be successful in the airline industry. We then address one of the most important findings and also a key principle for success: the importance of achieving strategic alignment, and of recognising and dealing with misalignments before they become destructive. We discuss the nature of strategic alignment, as well as the main misalignments that companies should be vigilant of. We offer frameworks to help managers diagnose the levels of strategic alignment in their organisations and to take corrective actions where needed. We note that achieving strategic alignment is a pre-condition for achieving sustainable competitive advantage. Chapter 8 then proceeds with further strategic lessons, which relate to the need to be clear about the company’s generic strategy (or a combination of elements of generic strategies), the importance of identifying, nurturing and investing in capabilities and core competencies that support the strategy, and the need to understand and foster strategic innovation. We then examine SIA’s institutional context and culture, and suggest that even though SIA has definitely gained from being located in a supportive institutional context, this is far from a comprehensive explanation of its success; its success can ultimately be traced to robust strategies, seamless execution and continuous vigilance and realignment. In addition to the eight chapters, we also provide a self-contained case study of SIA, which presents key information from our research on the main elements of the company’s success. This case study can be employed by instructors, organisation development practitioners and consultants as a launching pad for debate on the strategic and organisational issues involved. The case study has been successfully used at different levels of instruction (undergraduate, MBA, EMBA and executive levels) in courses relating to strategy and services marketing. Instructors who wish to use this case study can contact the publisher or one of the authors for further information.

a b s t r a c t Singapore Airlines has consistently outperformed its competitors throughout its history, in the context of an unforgiving industry environment. We examine how Singapore Airlines has achieved its outstanding performance and sustained its competitive advantage, through effectively implementing a dual strategy: differentiation through service excellence and innovation, together with simultaneous cost leadership in its peer group. We examine the organizational elements that have allowed the company to do so, illustrate its strategic alignment using a vertical alignment framework, and conclude by highlighting the significant challenges ahead.

Singapore Airlines is widely regarded as an exemplar of excellence in an industry whose service standards are tumbling. What's not so well known is that the company is also one of the civil aviation industry's cost leaders. SIA's success in executing a dual strategy of differentiation and cost leadership is unusual. Indeed, management experts, such as Michael Porter, argue that it's impossible to do so for a sustained period since dual strategies entail contradictory investments and organizational processes. Yet SIA, and a few other emerging-economy companies, view the dualities as opposites that form part of a whole. SIA executes its dual strategy by managing four paradoxes: Achieving service excellence cost-effectively, fostering centralized and decentralized innovation, being a technology leader and follower, and using standardization to achieve personalization. The results speak for themselves: SIA has delivered healthy financial returns; it has never had an annual loss; and except for the initial capitalization, the Asian airline has funded its growth itself while paying dividends every year.

We explore how Singapore Airlines has become one of the highest performing and respected airlines in the world through its ability to transcend organizational paradoxes. We address four paradoxes: cost-effective service excellence, simultaneous decentralized and centralized innovation, being simultaneously a follower and a leader in service development, and accomplishing standardization as well as personalization in customer interactions. We employ empirical data from multiyear case research on Singapore Airlines to outline how the organization simultaneously balances dual capabilities (seen as poles of the paradoxes) that most other organizations would consider distinct or incompatible. We conclude that the ability to balance opposing poles and in this way transcend paradoxes is what affords Singapore Airlines its sustainable competitive advantage and that this ability is becoming more and more relevant to organizational effectiveness as competition intensifies.